The long, slow and painful retreat of major Australian publishers from the
Net took another step today when John Fairfax Holdings announced that it
was closing
CitySearch's Sydney print
directory and looking at the possibility of further sales and/or joint ventures
in other cities. Fairfax had originally bought 60% of CitySearch in 1998
for AU$9 million - largely on the strength of its internet business - and
had purchased the extra 40% it didn't already own in 2000 for an undisclosed
amount. Unfortunately, however, the business never lived up to the company's
aspirations and instead lost enormous amounts of money (most recently, AU$7
million in the December 2001 half year). Two months ago, Fairfax sold the
online arm of the business to White Pages for AU$20 million. The closure
of the Sydney printing plant - with the loss of 30 jobs - completes the company's
exit.

The
Australian Domain
Administration (auDA) issued a consumer alert today following repeated
complaints about bogus domain name renewal scams being run by some Australian
companies. The auDA alert advises consumers not to give their registry keys
to anyone. The move has come following complaints over the last few months
that consumers have been receiving unsolicited "renewal notices" advising
that registry keys are now required to renew a domain name. auDA advise that
this isn't so if consumers renew the domain through the original registrar,
and registry keys are only ever required if consumers elect to swap registries.
Otherwise, their sole purpose is to allow the holder of the key to find when
the domain is due to expire, and to change contact details and delegation
information. auDA has also been referring some of the complaints it has received
to the Australian Competition and Consumer Commission for future legal action
against perpetrators of the scam.

In a report likely to have strong parallels in Australia, research firm
NetValue say that email has now become more popular than postal mail
in the UK, with the number of emails being sent and received from households
exceeding letters by nearly 300 million. The UK also leads Europe in email
usage, sending more than 170 million more emails than the French and 185
million more than the Germans per month. The company tracked email usage
in Germany, France, Denmark, Spain and the UK during December 2001 and January
2002 to draw its findings. NetValue believe that more than 550 million emails
were sent and received by British households during January 2001 alone, including
an estimated 100 million web based emails sent through services such as HotMail
and Yahoo. NetValue also say that nearly 13 million people now regularly
use email from their home computers in the UK, with an average home user
sending 12.3 emails and receiving 39.1 emails per month.

Microsoft have begun urging customers to upgrade from the company's free
HotMail service to a paid
US$19.95 service by the employing the unusually heart-warming tactic of clearing
out their email folders without notice and bombarding them with spam for
the paid service instead. Earlier this week - without warning - HotMail users
found themselves being diverted to the company's Passport sign-on screen
to gain access to their accounts; and many others then found their entire
email boxes had been wiped. Microsoft acquired HotMail in January 1998 for
US$400 million, and the service has been losing money ever since. Several
months ago HotMail altered its terms of service to require users to log in
at least once every 30 days or risk losing their account. Then the company
restricted HotMail boxes to 2Mb limits, asking users to pay US$12.95 for
extra storage. The aggressive new push for Passport sign-ups is seen by analysts
as a desperate drive to get as many users involved in the company's .Net
services strategy ahead of possibly severe penalties being levied against
it in the USA and Europe for anti-competitive behaviour, and the possible
rise of the competing Liberty Alliance - an alternative to .Net - being backed
by most of the company's competitors.

New Zealand households may be marginally more wired than Australia (see
yesterday's story) but Australian businesses leave their Kiwi counterparts
well in the shade when it comes to using IT, according to a new report released
by the
Australian Bureau of
Statistics (ABS) today. In their "Business Use of IT 2000-01"
study, the ABS report that 84% of urban businesses and 82% of rural businesses
now use computers; 71% of city firms and 65% of rural firms have Net access;
and 23% vs 19% now have web presences. Not surprisingly, the ABS found that
the larger the firm the more likely it was to have both Net access and a
web site, noting that penetration of all three technologies was lowest amongst
the country's 457,000 small businesses (79% using PCs; 64% using the Net
and 14% with a web presence) but highest amongst the country's 6,000 largest
firms (100%, 99% and 81% respectively). The ABS also found that the levels
of penetration varied widely amongst different industries with the accommodation,
cafes and restaurants industry trailing the field. The ABS estimates that
there are 153,400 Australian web sites - very similar to the estimate produced
by our own
AIGI.

According to the
Statistics New Zealand
(SNZ), 37% of New Zealand households had Net access by the end of 2001 -
slightly more than the estimated 33% of Australian households reported by
the Australian Bureau of Statistics for the same time period. Households
in urban areas, households in apartment complexes and households where the
home was owned by one of its residents were more likely to have Internet
access, SNZ found. Net penetration was also higher among households with
bigger annual incomes, achieving in excess of 70% penetration amongst households
with incomes over NZ$100,000 but managing only 10% percent amongst households
with incomes under NZ$15,000. However small business use of the Net in the
shaky isles still remains low. According to a survey by New Zealand's
Employers & Manufacturers
Association, the most common use for small business PCs in the country
is to look after financial and accounting records. Only 39% of NZ companies
surveyed use their PCs to go online at the present time.

European Union (EU) leaders approved a multi-billion-dollar satellite network
over the weekend at an EU summit in Barcelona, Spain. The project - a 30-plus
satellite system known as Galileo - is expected to cost $A6billion in public
and private funds and is designed to break an existing US stranglehold on
global satellite communication systems. It is proposed to be running by 2008.
The satellite system could be used in air traffic control, military and
intelligence operations and for operating mobile phone networks, ending current
US dominance in all these areas in the European marketplace. Britain and
the Netherlands dropped their long-standing concerns about the cost of the
system after intense lobbying from France, Italy and Spain. French President
Jacques Chirac had warned last year that Europeans risked becoming ``vassals''
of the USA if the EU didn't proceed with the project. The final details of
the plan will be finalised by European transport ministers later this month.

America Online (AOL) -
the world's largest ISP - may swap from using Microsoft's Internet Explorer
in its browsers to using new technology developed by its subsidiary Netscape.
The company confirmed yesterday that it is trying out Netscape's Gecko rendering
engine in its latest browser release and may swap to it completely in AOL
8.0, which is expected to be due out in about 6 months. While the move may
have little direct impact in Australia - where AOL has largely failed to
achieve any significant market share against domestic giants BigPond or OzeMail
- a swap in the USA could reignite the "browser wars" by decimating Microsoft's
existing Internet Explorer market share and significantly boosting Netscape's
within a matter of months. The move could also frustrate Microsoft's .Net
plans, which rely heavily on having the majority of users tied to the company's
technology. AOL - with 34 million subscribers - currently accounts for about
14% of the world's online population. In the USA, pundits believe that Netscape's
market share is between 10% and 20%. In Australia, however, the browser generally
commands a share of between 35% and 45%

A rare glitch in Australia's .com.au name server caused havoc to some Australian
users today, preventing many from sending out emails and making a number
of .com.au web sites uncontactable on the Net for several hours as well.
According to the
Australian Domain Name
Authority (auDA), the problem occurred because of an accidental mismatch
between zone files held in Australia and one held by RIPE, a Dutch-based
organisation which administers IP addresses for Europe. The problem began
at approximately 7:00am AEST when a Melbourne IT server generated an incomplete
.com.au zone file that was copied to RIPE via one of auDA's nameservers.
The problem was detected soon afterwards and correct files were regenerated
by Melbourne IT at 8:00am and then again at 9:00am. However, RIPE's server
was unable to receive a copy of the newer, corrected file until shortly before
12 noon. Further - because of DNS caching - the problem continued to affect
at least some internet users for several hours after that.

The fictitious European nation of
Ladonia will alter its
web site after receiving more than 3,000 applications for citizenship from
Pakistanis in the last month. Ladonia - created by artist Lars Vilks in 1996
after a long fight with Swedish authorities over two sculptures he'd built
- physically "occupies" 1 square km of windswept coastline in Sweden. Most
of the country exists in cyberspace. But that has not deterred an immigration
rush. "It all started a month ago when we began getting the first applications
from Pakistan", Vilks said. "Then the pace really picked up and we started
receiving regular mail asking how to get to Ladonia and where our embassy
in Pakistan was situated." But surprised that the web site had given people
false hopes, Vilks has temporarily shut down the site's citizen application
facility (the imaginary country already has 6,000 registered "citizens")
"I just spoke with my Minister of Internet. We are going to try and open
it again with a message warning people that we cannot provide jobs or housing,"
Vilks said.

More signposts of the Information Age: according to a new study by
Xerox, more than half of all office workers now find sharing knowledge
electronically more effective than talking face-to-face, and knowledge-sharing
is now becoming an integral part of modern business practice. In a survey
of IT decision-makers and other IT professionals attending a recent annual
US trade show, Xerox found that 52% of respondents ranked email, intranets
and extranets as the most effective ways to share information compared with
18% who ranked talking to people face-to-face as the best method of
knowledge-sharing. The survey also found that 50% of respondents now share
more than half their work in any given day, while 33% share less than half
and 18% a quarter of their work. 33% volunteered that they shared information
as part of company practice while 21% did so because they wanted to educate
colleagues. A further 21% did so to provide direction, 11% to foster a team
environment and 8% to solicit feedback.

In signs of continuing changes brought about by the Net,
Gartner Dataquest (GD)
reported on Saturday that global mobile phone sales dipped below 400 million
units in 2001 - the first decline ever seen in the history of the industry.
GD estimate that overall consumer sales declined by 3.2% to 399.6 million
units last year, a sharp drop from the 60% pa average growth rate seen between
1996 and 2000. GD said that saturated markets in Europe, the removal of subsidies
by telecoms operators, a burgeoning second-hand market in developing countries
and stock dumping by suppliers eager to offload unsold inventories have all
contributed to the fall and the boom days of mobiles may now be over. Meanwhile,
worldwide B2B ecommerce looks set to grow strongly over the next several
years according to
International Data Corp.
(IDC). They predict that after a slow uptake in 2000-2001, worldwide B2B
sales will quickly grow from US$282 billion in 2000 to US$4.3 trillion by
2005. According to IDC, the USA will remain the largest region for B2B
e-commerce, with purchases increasing at a compound annual growth rate of
68% over 2001-2005. In Western Europe, B2B purchasing will increase at 91%
pa during the same period, while the Asia-Pacific will see a compound growth
rate of 109% pa.

Sun Microsystems today
filed a private anti-trust suit against Microsoft, alleging that Microsoft's
handling of Java has led to Sun suffering "diminished licensing fees, lost
computer workstation sales, lost server sales, lost software product sales,
lost sales of consulting services and a diminution in value to Sun's trademarks,
reputation, and goodwill" The suit will seek up to US$1 billion in damages
and a number of punitive remedies against the company including the unbundling
of Internet Explorer, IIS and Microsoft's forthcoming .Net initiative from
the company's underlying Windows operating system. Commenting on the suit
- which had been rumoured for some time - Sun's General Counsel Michael Morris
said that Sun is trying to stop Microsoft from making its products a mandatory
part of the Net by using its monopoly power to create "Microsoft-controlled
choke points to Internet access". The suit follows a similar private anti-trust
suit launched by AOL Time Warner in January over the damage Microsoft allegedly
caused to Netscape (now owned by AOL) during the "browser wars".

According to a study by US-based research firm
Nielsen NetRatings (NN),
there are now almost half a billion people with home Internet access around
the world. NN estimate that 498 million people had home Internet access by
the end of last year, up 5.1% from the previous quarter. 40% of home users
were in North America, 27% were in Europe, the Middle East and Africa, and
22% were in Asia. NN note, however, that Asia now has the fastest growing
home Internet population and estimates that the number of people online there
grew 5.6% in the 4th quarter of 2001 compared to a 4.9% increase in Europe,
2.5% in the USA and 3.3% in Latin America. Meanwhile, new figures from the
UK-based
Oftel indicate that 45%
of households in the UK now have Internet access, up from 30% less than a
year ago. The agency attributes the rise to a growth in "unlimited access"
Net subscription services.

Repeated system outages and concerns over security have left 45% of Australians
either completely disinterested in or strongly distrustful of online banking,
according to a new report from
Corillion International.
While Australia now had one of the highest uptake rates for online banking
in the world (23% versus a US uptake rate of 15% and a UK uptake rate of
12%), frequent service breakdowns, outages and recurrent stories of security
breaches have made many Australians reject online banking outright. Further
- in an ironic twist - Corillion also suggest that most Australian banks
are currently losing money with their online banking services and that hoped-for
cost savings have yet to eventuate. This, they believe, is because few customers
want to do all their banking online. Accordingly, higher transaction fees
and reduced levels of customer service introduced by most of the big banks
in the last decade in their efforts to discourage consumers from face-to-face
banking may simply be encouraging many to swap to smaller, more human banks
instead.

Online fraud in the USA last year was 19 times higher than offline fraud,
dollar for dollar, according to Internet research firm
GartnerG2. And while
they estimate that only $US700 million of the $US61.8 billion spent online
by US consumers last year was lost to fraud (ie around 1.14%), this amount
still exceeded the total dollars lost to offline credit card fraud by a margin
of almost 19 to 1 and is a significant issue of concern with both consumers
and legitimate etailers. In a survey of 1000 US online buyers, Gartner found
that 5.2% of them reported suffering some form of credit card fraud at some
time while another 1.9% said that they were victims of identity theft. Gartner
report that this issue is of such concern to a significant minority of consumers
that 18% are now using digital theft protection software currently being
promoted in the USA by Visa and Mastercard. Gartner also found that most
online fraud is aimed at high profile ecommerce sites; that it roughly triples
during the Christmas season when the volume of transactions means merchants
have less time to check each individual order for suspicious behaviour patterns;
and that the three countries currently generating the highest levels of
fraudulent orders online were the Ukraine, former Yugoslavia and Indonesia.

In a new study likely to have strong parallels in Australia, the
Pew Internet & American Life
Project (PEW) has found that as Internet users gain experience online,
they increasingly turn to it to perform work-related tasks, to make purchases
and do other financial transactions, to write emails with weighty and urgent
content, and to seek information that is important to their everyday lives.
PEW's year-long survey of 1,501 Net users found that the more experience
users have of the Net, the less they use it (PEW report a slight dip in the
length of the average online session, from 90 minutes to 83 minutes over
the course of one year) but the more productive they become with it. Users
also find that it becomes more and more indispensable to daily lives across
time. Interestingly, Net use also appears to modify offline behaviour, with
many study subjects reporting they now watch less TV and do shop less physical
shopping than they did 12 months ago. PEW's study also found that Net users
were more likely to bring their work home with them, and that spam emails
were now a significant problem for 44% of people connected to the Net.

After patchy and uneven growth in January, the Australian Internet suffered
a general die-back in February 2002 according to the search engines we poll
to construct our monthly Australian Internet Growth Index (which has
been attempting to measure the number of live Australian web
sites - as opposed to the number of registered domains - since January 1996).
Growth ranged from -9.8% in Sydney, - 4.8% in Adelaide and -3.4% in Melbourne
to a modest +1% in Brisbane, Perth and rural Australian areas. We estimate
that approximately 6,200 web sites vanished during the last 28 days . All
the same, whether this die-back actually occurred in February or a few months
earlier due to the delays most engines now have in indexing sites is difficult
to determine. The March 1st figures (with February 1st figures in brackets)
are as follows:

Australian
Internet Growth Index February 2002(Figures Show Estimated Live Sites)

Brisbane - 12,090 (11,970)

Sydney - 46,242 (51,266)

Melbourne - 43,907 (45,453)

Adelaide - 8,478 (8,905)

Perth - 9,622 (9,527)

Hobart - 4,048 (4,110)

Canberra - 8,555 (8,739)

Darwin* - 10,916 (10,808)

NB: The Darwin figure includes rural Australian sites

During February 2002 Australian Cybermalls hosted 68,830 visitors,
a fall on January's 79,701 as we passed through the shortest month of the
year. Our visitors viewed 310,131 page displays from our servers, which in
turn consumed 14.8 Gb of bandwidth.